BRAZIL Law and Practice Contributed by: Fernanda Levy, Aline Bauermeister, Rodrigo Menezes and Fabiana Fagundes, FM/Derraik
negotiate the terms of the investment and, con - sequently, the transaction costs. Choosing the right instrument involves consid - ering the current valuation, the expected future financing needs and the strategic goals of the company. Note that Complementary Law Bill No 252/2023 is currently being debated and voted on at the National Congress, which would create a new contractual form for VC investments in Brazil similar to the SAFE, called the Convertible Capi - tal Investment Agreement (CICC). 3.4 Documentation Deal Documents In a growth company’s financing round, several key documents are typically required to suc - cessfully negotiate and close the deal. The exact nature of these documents can vary depending on the jurisdiction, the structure of the financ - ing (eg, equity versus debt) and the stage of the company. However, certain documents are almost always part of such transactions, as fol - lows. Term sheet This is a non-binding document outlining the key terms and conditions of the investment. It serves as the basis for drafting detailed and definitive legal documents. Investment agreement (subscription agreement or stock purchase agreement) In an equity financing round, this binding and definitive agreement details the terms under which the securities are issued to the investor, including: • the purchase price;
• representations and warranties of the com - pany; • conditions for closing; and • covenants of the parties involved. Shareholders’ agreement (or investors’ rights agreement) This agreement outlines the rights and obli - gations of the shareholders post-investment, including: • governance provisions; • rights of first refusal; • drag-along and tag-along rights; • voting rights; and • information rights. Amended and restated articles of incorporation (or memorandum and articles of association) When the company is structured offshore and the financing deal is made at the Cayman com - pany level, the transaction documents would include amendment to the company’s articles of incorporation, to reflect the new capital structure and any rights or preferences attached to the This document complements the investment agreement by disclosing exceptions to the repre - sentations and warranties made by the company and the founders in the stock purchase agree - ment. It is critical for risk allocation between the parties based on due diligence findings. Frequently used templates No standard templates are used in deals con - ducted mainly in Brazil. In other jurisdictions with a more developed start-up and VC ecosystem, certain organisations or legal entities have pro - newly issued shares. Disclosure schedule
48
CHAMBERS.COM
Powered by FlippingBook